World financial crisis Part 5

BOB HERBERT: Well, he mentioned it, but he doesn’t really address it. And if you have the top 1 percent getting 121 percent of the income gains, it meets that standards of living for the rest are declining. And that’s exactly what’s been happening. Median income in the United States has gone down since the recession ended; in the recovery period, median income has gone down. Poverty is expanding. We have nearly 50 million people who are officially poor in this country and another 50 million who are near poor. That’s close to—you’re getting close to a third of the entire population. So, there is no way to address challenges that are that enormous without making enormous investments, and yet we’re in a period now of austerity. So, I’m not sure how you begin to slice through the gloom here.

quote:

BOB HERBERT: Sure. You know, one of the things that’s not talked about very much is that so many of the people who are at the bottom of the socioeconomic ladder are racial and ethnic minorities. And if you look at African Americans, for example, I believe Pew says that the median household income for African Americans is around $5,000. So that’s really like no money at all. That would include the money that you had in the bank, perhaps the value of your car, if you had any equity at all in your home. I was up at Brandeis University a few months ago at a seminar on poverty, where one of the people presenting was talking about the median wealth of single African-American women with children under the age of 18, and their median wealth is $1. I mean, that is just really crazy.

AMY GOODMAN: Explain wealth, $1.

BOB HERBERT: Wealth as opposed to income. So, wealth would include any money that you might have in a bank, any assets you would have, stocks and bonds, the value of your home, etc., etc. So if you—cumulatively, the median for that group that they were talking about is $1. That’s basically no money at all. And that—the median is right there at the middle, so that means 50 percent of that group, the median wealth is less than $1. So, you know, it’s almost impossible to survive there.

These proposals, when fully implemented, will not only enforce a permanent regime of fiscal austerity, but also further remove macroeconomic policy from democratic control. For these reasons they need to be vigorously fought right across Europe. But if readers in the UK (Canada) imagine that they are not affected, since we are not in the Eurozone, they need to think again, for the structural deficit has also become the preferred fiscal target of Chancellor of the Exchequer George Osborne, backed by the Office of Budget Responsibility. While the most influential economic think tanks, the Institute for Fiscal Studies and the National Institute for Economic and Social research, have begun to challenge the Coalition's austerity policies, they have not as yet repudiated the use of the structural deficit as a fiscal target. So what exactly is the structural deficit, and why is it such a danger?...

"...People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often ceases to amaze. But the HSBC case went miles beyond the usual paper-pushing, keypad-punching sort of crime, committed by geeks in ties, normally associated with Wall Street. In this case, the bank literally got away with murder - well aiding and abetting it, anyway..."

"The US, UK, Japan and eurozone are desperate to grab a slice of someone else's growth if they can't generate any of their own. How badly will this go down with the developing world? And are we seeing a money printing competition? Is printing money a good idea at all? Crosstalking with Ed Butowski, Uri Dadush and Martin Hennecke."

"New Secretary of State John Kerry's first contacts were not devoted to the Asia pivot or the partition plan for the Middle East, but to the creation of a NATO economy...this project would solve the economic crisis in the United States at the expense of Europeans..."

As with almost everything of genuine political significance, there is a shocking lack of awareness in Canada about TPP

Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.

The European Union is currently undergoing the biggest economic crisis since its foundation 20 years ago. Economic growth is collapsing: the eurozone economy contracted by 0.6% in the fourth quarter last year and this slump is set to continue. The euro crisis was incorrectly blamed on government spending, and the subsequent imposition of cuts and increased borrowing has resulted in growing national debts and rising unemployment. Government debts in crisis countries have predictably soared: the highest ratios of debt to GDP in the third quarter of 2012 were recorded in Greece (153%), Italy (127%), Portugal (120%) and Ireland (117%).

Europe’s member states have responded by implementing severe austerity programmes, making harsh cuts to crucial public services and welfare benefits. The measures mirror the controversial structural adjustment policies forced onto developing countries during the 1980s and 1990s, which discredited the International Monetary Fund (IMF) and World Bank. The results, like their antecedents in the South, have punished the poorest the hardest, while the richest Europeans – including the banking elite that caused the financial crisis – have emerged unscathed or even richer than before.

Behind the immoral and adverse effects of unnecessary cuts though lies a much more systematic attempt by the European Commission and Central Bank (backed by the IMF) to deepen deregulation of Europe’s economy and privatise public assets. The dark irony is that an economic crisis that many proclaimed as the ‘death of neoliberalism’ has instead been used to entrench neoliberalism. This has been particularly evident in the EU’s crisis countries such as Greece and Portugal, but is true of all EU countries and is even embedded in the latest measures adopted by the European Commission and European Central Bank.

This working paper gives a broad and still incomplete overview of what can best be described as a great ‘fire sale’ of public services and national assets across Europe. Coupled with deregulation and austerity measures, it is proving a disaster for citizens. Nevertheless, there have been clear winners from these policies. Private companies have been able to scoop up public assets in a crisis at low prices and banks involved in reckless lending have been paid back at citizens’ expense.

Encouragingly though, there have been victories in the battle to protect and improve Europe’s public services which serve as beacons of hope. There is even a counter-trend of remunicipalisation taking place in Europe as people have become aware of the cost and downsides of privatising public services, particularly water. As public awareness grows that the European Commission far from solving the crisis is using it to entrench the same failed neoliberal policies, these counter-movements and growing popular resistance can work together to halt the corporate takeover of Europe.

In the face of massive popular outrage, Cypriot MPs spectacularly vote against a bank deposit tax imposed by the Troika, leaving the eurozone reeling.

We almost stopped believing it was possible, but apparently some lawmakers in European debtor states still have the guts and ability to stand up to their cocky, greedy and reckless foreign creditors. On Tuesday, an overwhelming majority of Cypriot MPs spectacularly voted against a bank deposit tax imposed by the Troika of lenders — with not a single MP voting in favor, despite the President’s warning that a no-vote would lead to financial armageddon. The tax was a prerequisite for Cyprus to receive its 10 billion euro EU-IMF bailout; the country’s dramatic act of defiance now leaves the eurozone reeling in great uncertainty as to the repercussions for the single currency.

Of course, the neoliberal European Goliath has itself to blame for the rebellious behavior of tiny Cyprus, whose 17 billion euro economy constitutes only half a percent of total eurozone GDP. After all, it was they who on Saturday blackmailed the Cypriot government into imposing a bank deposit tax of 9.9% on rich depositors — mostly Russian oligarchs – and 6.75% on ordinary Cypriot savers with less than 100.000 euros in the bank. The bank deposit tax was needed, according to EU and IMF officials, in order for Cyprus to contribute 7 billion towards the 10 billion euro EU-IMF bailout. If creditors were to take the burden of covering the entire 17 billion euro shortfall, so their reasoning went, it would both outrage German voters and take Cypriot debt levels to unsustainable levels.

But as soon as the “agreement” was announced, it immediately became obvious that the bailout was botched. The 10 billion euro emergency loan alone will already push Cyprus’ debt-to-GDP ratio to an unsustainable 130%, forcing an unprecedented degree of austerity onto the country — the likes of which would make even the Greek plight look like a walk in the park. But more importantly, perhaps, Cypriot depositors were rightly outraged by what effectively amounted to a government raid (spurned on by foreign creditors) on their hard-earned savings. While wealthy bondholders were once again let off the hook, ordinary Cypriots were forced to pay for the reckless behavior of their shady offshore banking sector and the irresponsible crisis management policies pursued by the European Union and IMF.

Taking to the streets in the thousands in an attempt to convince the government to backtrack on its commitment to foreign creditors — and simultaneously taking to the banks in the hundreds of thousands in an attempt to retrieve their savings — the panicked reaction of the Cypriot people threatened not only to spill over into a wholesale loss of confidence in the political system, but also to unleash nothing short of a potentially self-destructive and internationally contagious bank run, which could have had dramatic reverberations across the eurozone as depositors elsewhere might conclude that their savings are no longer safe either. Protesters in Nicosia were therefore right to carry placards into the streets in Spanish and Italian: it may be us today, but there is no doubt that you will be next.

Under this immense popular pressure, and under the general threat of a crippling bank run and mass capital flight that could force the Cypriot government to pump even more liquidity into its banks — which would in turn require it to print money, implying a forced exit from the eurozone and a return to the Cypriot pound — a total of 36 out of 56 MPs voted against the deposit tax, with 19 prominent government MPs abstaining and one absent. Not a single MP voted against. How come? Why did Cypriot lawmakers suddenly decide to listen to their own people, where Greek, Spanish, Irish and Portuguese MPs have made a profession out of backstabbing their voters?...

"One indelible sign of state capture by pirate corporations and the financial jackals holding sway on Wall Street and the City of London is the ease with which former 'regulators' slip into plum positions with the firms which they supposedly 'regulated' as 'public servants'.."

"Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone 'troika' officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation at the Bank of England dated December 10, 2012, shows that these plans have been long in the making: they originated with the G20 Financial Stability Board in Basel, Switzerland and that the result will be to deliver clear title to the banks of depositor funds..."

I am hoping that the two credit unions were I have my bank accounts have not over leveraged themselves to buy derivatives and other risky investments. The banks that have failed have all borrowed many times their deposits to make bets at the Wall Street casino where the packaged "securities" were based on lies and fraud.

The government can't steal the depositors money unless the bank itself has made those kinds of bad investments.

I am hoping that the two credit unions were I have my bank accounts have not over leveraged themselves to buy derivatives and other risky investments. The banks that have failed have all borrowed many times their deposits to make bets at the Wall Street casino where the packaged "securities" were based on lies and fraud.

The government can't steal the depositors money unless the bank itself has made those kinds of bad investments.

..good question. is there a way you could find out the truth about the credit unions?

"Many billions of Euros are being extracted from Europe's vassal-debtor nations - Spain-Greece-Portugal and Ireland - and transferred to the creditor banks, financial speculators and swindlers located in the City of London, Wall Street, Geneva and Frankfurt. Under what has been termed 'austerity' programs, vast tributary payments are amassed by ruling Conservative AND SOCIAL DEMOCRATIC REGIMES via public investments social programs and employment..."

"When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn't believe it.

The memo confirmed every conspiracy freak's fantasy; that in the late 1990s, the top US Treasury officials, secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.

When you see 26.3% unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears..."

While in Iceland this summer, I learned that Gordon Brown, former PM of the UK, had accused the Icelandic government of "economic terrorism" for defaulting on its debt. Soon after, the volcano erupted, which grounded flights all over Europe. So, while in Reykjavik, I saw t-shirts everywhere that said, "Cash, we thought you said ash". Now, that's how you respond to a manufactured financial crisis. BTW, Iceland is back on its feet, economically, and is doing reasonably well. Can't understand what the governments of Greece and Spain are thinking.

Deficit Is Falling Because Of Government Austerity, Not Economic Recovery

quote:

KELTON: Well, mainly because if you think about the rationale, if the rationale is that the U.S. government is at some future date, you know, whether it's ten years or 15 or 25 years from now, going to find itself in a situation where it has a debt problem--and by debt problem [incompr.] you know, you have debts that you can't pay--well, then we know that that's just a silly thing to be worried about if you're the United States of America, because the U.S. government borrows in dollars and has a monopoly on the creation of the U.S. dollar. Nobody else on the planet can legally create U.S. dollars. Only the U.S. government can do that. And so if you're talking about whether you can afford to make good on promises that you've made to the elderly, to dependants, to the disabled in the form of Social Security support, you would never say we need to reform these programs today because somewhere down the road we're not going to be able to mail the checks to the seniors and the disabled that we promised, because we won't know where to get dollars. That doesn't make any sense. And Alan Greenspan has said as much. So I think what happened is that we watched what happened in places like Greece, and we bought into the story that, you know, if somehow we don't get our fiscal house in order--we need to behave like a household, tighten our belts, and all that sort of stuff--we're going to end up like Greece...

Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014?

The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time. (In March 2014, official QE was tapered to $55 billion per month and to $45 billion for May.)

With foreign investors dumping US treasuries like there's no tomorrow, so much for tapering off at the funny money printing presses. It helps explain why the junkies on Wall Street are reaching new highs off of a McHappy Meal economy. If the financial sector and the general economy doesn't cave in on itself before the next presidential election, it'll be the result of another 'miracle' being performed at the Fed.

We don't see any ink in the press, nor any interest in parliament regarding what percentage of Canada's monthly operating deficits are diverted into the purchase of US fiat treasuries. Or are we to assume that the reason the Conservatives have been borrowing hand over fist is to maintain the social programs that they cherish so much.

It's a curious thing as well that the evil empire and it's western lackey states are threatening Russia these days, as a warning to others perhaps, particularly at a time when deals are about to be struck between some of the players that make up the BRICS nations to trade certain commodities in their own currencies instead of trading in US dollars. Qaddafi made the mistake of floating that idea around among the African nations. It obviously makes some people upset for others even think about it.

Sounds like funny-money laundering is the Fed's latest 'stimulus' scheme. It's either that, or there's a new financial powerhouse on the world's financial scene. The citizens of Belgium should be more surprised than anyone to hear the country has that kind of money to throw away.

Quote:

Foreign capital inflow into U.S. Treasuries declined sharply in March, with robust demand coming mainly from Belgium, which extended its recent run of heavy buying of U.S. debt. Holdings of U.S. Treasuries in Belgium rose a net $40.2 billion in the month. Over the last five months, Belgium's net increase totaled about $201.1 billion.

Quote:

The euro zone nation is now the third largest holder of U.S. Treasuries with $381.4 billion, after China and Japan.

We live in a society where the majority of people are up to neck in debt. And contrary to what we are told, the big banks want to keep it that way, according to Andrew Ross. Ross is professor of social and cultural analysis at New York University. He is also a social activist who participated in Occupy Wall Street.

The issue is not going away...what with the spiraling acceleration of financial and real estate assets, the Central banks are being forced to end their 14 Trillion plus money printing scam (since 2008) to sustain? the system!

Creating increasing pressure on the bond markets to take up the slack!
Combined with the Trump administration´s attempts to weaken the dollar to strengthen its faltering industry, forcing increased inflation...which in turn is guaranteed to create bankruptcies to the highly indebted......

¨However, a bigger point brought up is what this renewed currency warfare could mean for the Federal Reserve in 2018, when a lower dollar will boost inflation even more than expected, forcing the FOMC to be more hawkish, and hike even faster, resulting in a risk asset crash.¨...from zerohedge

"...The threat of war was only one of the threats vexing the Davos elite. The past week saw a spate of warnings that red-hot markets are on the verge of a meltdown. William White, the chairman of the OECD review board, declared this week: 'All the market indictors right now look very similar to what we saw before the Lehman crisis..."

"...The threat of war was only one of the threats vexing the Davos elite. The past week saw a spate of warnings that red-hot markets are on the verge of a meltdown. William White, the chairman of the OECD review board, declared this week: 'All the market indictors right now look very similar to what we saw before the Lehman crisis..."

WSWS's Trotskyist eschatology bears a strong resemblance to the Christian variety: the promised apocalypse, after which everything will be ruled by the one true doctrine, is always just around the corner and foretold by any number of current events.

WSWS's Trotskyist eschatology bears a strong resemblance to the Christian variety: the promised apocalypse, after which everything will be ruled by the one true doctrine, is always just around the corner and foretold by any number of current events.

WSWS's Trotskyist eschatology bears a strong resemblance to the Christian variety: the promised apocalypse, after which everything will be ruled by the one true doctrine, is always just around the corner and foretold by any number of current events.....

you miss the point entirely....latest financial news is greater increases in mortgage rates.....a sure sign of mass bankruptcies and foreclosures.........it is not that one dogma will come to the fore...it means that people must begin taking the steps to propse and act out their ideas of the alternatives...what strategies to take up...discussions must begin...the point of describing the imminent collapse is to get ready!!!

you miss the point entirely....latest financial news is greater increases in mortgage rates.....a sure sign of mass bankruptcies and foreclosures.........it is not that one dogma will come to the fore...it means that people must begin taking the steps to propse and act out their ideas of the alternatives...what strategies to take up...discussions must begin...the point of describing the imminent collapse is to get ready!!!

Ten years ago there were mass foreclosures but the economic system still didn't collapse. It hasn't collapsed in Greece either. The people with all the money aren't going to let the worldwide economic system collapse because then they wouldn't be rich anymore.